Red…in the face

Evening,

I do not need to say what has happened to the stock market. Unrests in several nations are causing stocks to drop. From a contrarian’s point of view, this is opportune time to get in the market – when there is irrational selling. For some of us, our portfolios have taken a few hits over the last few days. I am not excluded from that, having stayed in long positions. I have just taken a look at the charts, and all I see is a whole bunch of awful – looking charts. Candles breaking through 200-day averages, channels violated, patterns busting up (I have 2 busted triangles), and several other stocks that seemed okay, suddenly turning bearish.

Quite a number of my latest posts about local counters can be considered busted as well, due to the latest sell-off happening in the markets. I do not want to comment on every single chart again. In a time like this, I can only write them off as not going my way. If I were trading those counters, it will be just one of those blue months of bad losses. Like in any book you will find on trading, or anything in life for the matter, I can only pick myself up and consider the recent sell-off as a blip. I was expecting downside in the STI, which should mean I should have been cautious in stockpicking. Sadly, I was not, and now I will have to label myself as having waved the bull flag for too long. I am still a year-long bull. I wrote some posts at the beginning of the year, and I am continuing to hold my bullish stance. The only consolation is that I did expect some downside in the first quarter. For my sake, I hope the markets do eventually turn up after this whole protests fiasco is over.

Now for some charts to keep things technical, since this is not my life blog – I do not plan to splash personal posts all over the place.

This is the STI, which I have been showing you all quite a few times in the past month. First off, we have a current, large channel I identified. The recent sell-off has sent the STI below the channel. I want to wait for some more days before considering this channel as invalid. From a purely technical standpoint, one can point a finger at the head and shoulders (in yellow shades), and say that cause the recent sell-off. This pattern is not too big, but seeing how the immediate future looks bleak, I have taken a projection of 2900 for the STI. The height of the whole pattern projected downwards brings us to 2900 region (refer to purple arrow). I have included fibonacci retracements studies as well. It is interesting to note that the important 50% level is at the 2900 level. So I do see some more room for downside in the STI.

Next, I have a couple of charts showing a fibonacci retracements studies done using the pre-crash high and post-crash low. I found out something intriguing about the 78.6% level. You can call it pure conicidence, or whatever else, but I will be looking at more 78.6% levels in the weeks ahead.

   

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

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2 Comments

  1. Posted February 25, 2011 at 8:12 PM | Permalink | Reply

    It is again a tough roller coaster. Instead of monitoring all the time, now I am resting my mind out of “micro activity” since I am on a “long” position – and most of my funds are already invested into the stocks I researched on.

    Therefore – for now, you’ll see a lot of other postings on AirAsia (budget travelling), food, health (health is wealth and the most important investment!) and perhaps some photos.

    • Administrator
      Posted February 25, 2011 at 9:53 PM | Permalink | Reply

      Hello Denzuke,

      Haha, yes, certain kinds of investors do not get caught in the ups and downs of the market. Good to hear you’re taking out all the “noise” in the market, and letting your investments work their way up slowly.

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